VanEck Semiconductor ETF is heavily concentrated in few stocks, especially Nvidia, posing potential risk.

From Nasdaq: 2024-06-08 03:15:00

VanEck Semiconductor ETF (NASDAQ: SMH) is a focused fund that invests in the semiconductor sector with only 25 stocks predominantly generating revenue from semiconductors. The top five holdings make up over 50% of assets, with Nvidia accounting for over 23%. The ETF has a concentration risk due to its limited diversification.

Investors should be cautious of VanEck Semiconductor ETF’s heavy weighting in a few stocks, particularly Nvidia, which has had an incredible 190% gain in a year. The fund’s current position exposes investors to potential downside if hot stocks cool off. It may be better suited for aggressive investors with strong convictions in semiconductor stocks.

Before investing in VanEck Semiconductor ETF, consider other options. The Motley Fool Stock Advisor team identified 10 stocks with strong growth potential, and the ETF didn’t make the cut. Their recommendations have historically outperformed the S&P 500 and can provide a blueprint for successful investing. Evaluate your risk tolerance and investment goals before making a decision on this ETF.



Read more at Nasdaq: VanEck Semiconductor ETF Is Riskier Than You Think